Archer agrees extension of debt facilities with lenders

Oil services company Archer has secured a consensual amendment and extension of its debt facilities with all the lenders to the company.

Archer said on Friday that the new financing agreements secure a robust financial foundation.

Under the new terms, Archer’s main loan facility was extended until October 1, 2023, a fixed amortization schedule was reinstated, interest margins unchanged, no new equity or liquidity required, debt reduction of $45 million, equal to NOK 3.1 per share, through reduction of subordinated convertible loan in exchange for a lowered conversion strike price, pro forma NIBD reduced from 582 million to $537 million, available liquidity of approx. $96 million post-refinancing.

Archer’s new CEO, Dag Skindlo, commented: “Archer is pleased to announce that we have agreed an extension and reduction of the debt with the lenders under our loan facilities. Archer has demonstrated considerable growth in EBITDA and EBIT over the last 2 years, and Archer has reduced the leverage ratio from 16.2x in 2016 to 6.2x at the end 2019.

“The improved financial results, with a year on year growth in EBITDA and EBIT of 30% and 170% respectively, coupled with robust cash flow generation and a meaningful liquidity buffer, have enabled us to secure these favorable amendments without issuing new equity and keeping interest margins at competitive levels. The agreed reduction in NIBD of 7.8% improves our credit metrics further, and the extensions ensure a solid financial platform to navigate a turbulent and challenging market environment.”

Revolving Credit Facility

Archer has concluded the negotiation with the lenders under the main facility resulting in amendments to, and an extension of, the $610.8 million revolving credit facility (RCF) and overdraft facilities.

The amendments to the RCF include: An initial decrease in the commitments by $31.7 million to a total of $579.1 million, a three-year extension of the final maturity to October 1, 2023, quarterly amortization of $4 million starting March 31, 2021, a cash sweep mechanism of excess liquidity above $90 million starting December 31, 2020, interest margin unchanged, amendments to the financial covenants with sufficient headroom to Archer’s business plan.

BNP/Hermes covered term loan

Archer has reached an agreement with BNP on the EUR 21.4 million outstanding BNP/Hermes covered term loan that include an extension of the final maturity until December 2022, a EUR 10 million instalment on signing of the amendment agreement, quarterly instalments of EUR 1.4 million starting in 2021, interest margin unchanged, amendments to the financial covenants with sufficient headroom to Archer’s business plan.

Subordinated convertible loan

Archer has reached an agreement with Seadrill that the principal and accrued interest as per December 31, 2019, is reduced by 75%, and the new outstanding amount will be $13 million.

At the same time, the conversion price is adjusted to $0.4 per share (from $2.083 per share). The final maturity is extended until April 1, 2024.

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